Pre-Passover Spending Down 13% as Malls Fill With Window Shoppers

Average bill down for fourth year running, with customers spending $88 on average.

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Azrieli Mall, Tel Aviv, April 5, 2015. Pre-Passover sales were disappointing for retailers.
Azrieli Mall, Tel Aviv, April 5, 2015. Pre-Passover sales were disappointing for retailers.Credit: Nir Keidar

Passover 2015 looked like good times for Israel’s shopping malls and the stores that fill them, but it turns out business was bad this year. Shopping centers and shops were filled with people, but most were engaged in window shopping rather than the real thing.

For the two weeks before the Passover holiday, which started last Friday night, sales per square meter at Israel’s malls were down 13.3% from the two weeks before Passover 2014, according to data collected from 2,000 merchants by Retail Information Systems. Merchants sold just 67 shekels ($17.10) a square meter, compared with 78 shekels the year before.

Not only were sales lower per square meter, but also in terms of the average purchase. Gama Management & Clearing, which processes credit-card purchases for retailers, said the average bill in stores fell 4% from last year – from 411 shekels in 2013 to 346 shekels this year. In 2011 – the peak year – the average was 563 shekels.

“I don’t know how to explain the decline in sales all over the country. Maybe it’s because it was the end of the month, perhaps because Passover fell this year at the start of April. It’s not clear,” said Arnon Toren, CEO of Azrieli Malls, Israel’s biggest mall developer and operator. “We’re still hoping the intermediate days of Passover [this week] will be successful, because this year it runs all week, Sunday through Friday.”

In the two-week run-up to the holiday, Azrieli saw sales at its flagship mall in Tel Aviv fall 18% on a per-square-meter basis from the same time last year. Its Malha Mall in Jerusalem saw sales drop 13.5%.

Turnover at the company’s (and Israel’s) oldest shopping mall, the Ayalon Mall in Ramat Gan, was unchanged from a year ago. However, that was because an additional floor had been built there in the meantime and opened last month.

“Over the final three days before Passover eve, there was a very big rise in sales,” said Toren. “Some of our malls succeeded in exceeding last year’s sales, but it didn’t make up for the decline in the [overall] two weeks.”

Other mall managers blamed Election Day, which occurred on March 17 and saw shoppers crowd into the malls and actually shop.

“The big malls felt increased traffic about 10 days before the holiday. But as the holiday approached, people apparently decided to do more of their shopping in neighborhood shopping areas, which are more accessible and have everything you need for the holiday – gifts, clothing for the children,” said Tali Etzioni, vice president for marketing and advertising at Pro-Mall, which operates 20 malls, including neighborhood centers.

Although she reported a 10% drop in turnover on average at Pro-Mall malls, she remained optimistic.

“People were hoping that pre-Passover sales would succeed in overcoming the difficult months that preceded it. Right now, it appears it’s not happening. But we need to wait and see how sales will be during the intermediate days. Right now, as I see it, Passover won’t be saving the year.”

Those buying presents had houseware and books at the top of their lists; far fewer bought apparel or shoes for themselves or others. Apparel and shoe sales were down more than 15% at the malls compared with a year ago, while sales for other categories rose 6%, although that increase was not enough to offset declines elsewhere.

“A lot of people were looking for less expensive presents. They have to buy a holiday gift, whether it’s a workers’ committee [union] or ordinary people. But this year they bought smaller presents for less money,” observed Miron Malcha, CEO of the Harmonia Labait houseware chain. “People have less money to spend.”

He said the average price for an item bought at his stores was down 6% from last year, at about 120 shekels. Merchants were ready for a difficult Passover and many of them, like Fox Home and Golf & Co., had sales offering discounts for minimum purchases.

“In past years nothing like this happened, and the chains would only begin sales in May after the holiday was over,” said Malcha. “This year, with the negative consumer price indices and an atmosphere of slowdown, they understand that people will be paying more attention to price.”

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